IFT - Infratil

[KW]

Who went broke? Not the infrastructure or fibre companies. The dot com bubble was built on business's with ideas but no capital, no assets and no profit and they are the one's who went broke. As for internet networks being "the big rage" - well that's a bit like saying electricity is just a passing fad

With AI on the cusp of becoming mainstream, the demand for increased data storage and processing capability is only getting started. IFT have been ahead of the curve on this and it's why their capitalisation value continues to climb strongly and the SP has nearly trebled in 5 years.

disc: My biggest holding by far.

Lots of them.  The most famous was Global Crossing.  https://en.wikipedia.org/wiki/Global_Crossing
It wasnt just "dot com" companies that went broke - those that supplied everything from fibre networks, to server hardware, to services also went under.  I was there, I remember.  Most of them were absorbed into competitors until there were only a few left.  Hardly any of the big name infrastructure providers of the late 90's early 2000s still exist today.

And by "big rage" I mean trendy share price fervour.  Just because electricity is permanent doesnt make investing in an electricity company a good investment.  I mean cell phones arent a passing fad either, yet do you own Blackberry, Nokia or Motorola?

Every man and his dog is jumping on the "lets build data centres" bandwagon.  I predict it will end in tears (for shareholders).  Because its just the same old cycle repeating - like railroads in the 1800s to fibre networks in the 2000s

[LoungeLizard]

Lots of them.  The most famous was Global Crossing.  https://en.wikipedia.org/wiki/Global_Crossing
It wasnt just "dot com" companies that went broke - those that supplied everything from fibre networks, to server hardware, to services also went under.  I was there, I remember.  Most of them were absorbed into competitors until there were only a few left.  Hardly any of the big name infrastructure providers of the late 90's early 2000s still exist today.

And by "big rage" I mean trendy share price fervour.  Just because electricity is permanent doesnt make investing in an electricity company a good investment.  I mean cell phones arent a passing fad either, yet do you own Blackberry, Nokia or Motorola?

Every man and his dog is jumping on the "lets build data centres" bandwagon.  I predict it will end in tears (for shareholders).  Because its just the same old cycle repeating - like railroads in the 1800s to fibre networks in the 2000s

Global Crossing (a controversial US company of nearly 30 years ago) is a bit of a stretch if it's supposed to be a cautionary tail for fibre networks that have been laid in recent years. I really don't think the executives at Chorus lie awake at night worrying about it.

You can find companies in any industry that have failed (eg your examples of Motorola etc). That doesn't mean one has to avoid the industry altogether - just be careful about which company you choose to invest in (and for how long).

More broadly, IFT invest in a wide range of assets of which data centres are only one. You're be hard pressed to find a safer stock on the NZX. And a big part of their business model involves building up assets and then selling them. It may well be that CDC will be sold at a huge premium at some point. Part of the recent SP surge for IFT has been Blackstone's purchase of Aussie datacentre Airtrunk for $23.5 BILLION. They obviously see a bright future for data centres and, as I'm sure you would agree, Blackstone are no mugs when it comes to investing.

[BlackPeter]

Global Crossing (a controversial US company of nearly 30 years ago) is a bit of a stretch if it's supposed to be a cautionary tail for fibre networks that have been laid in recent years. I really don't think the executives at Chorus lie awake at night worrying about it.

You can find companies in any industry that have failed (eg your examples of Motorola etc). That doesn't mean one has to avoid the industry altogether - just be careful about which company you choose to invest in (and for how long).

More broadly, IFT invest in a wide range of assets of which data centres are only one. You're be hard pressed to find a safer stock on the NZX. And a big part of their business model involves building up assets and then selling them. It may well be that CDC will be sold at a huge premium at some point. Part of the recent SP surge for IFT has been Blackstone's purchase of Aussie datacentre Airtrunk for $23.5 BILLION. They obviously see a bright future for data centres and, as I'm sure you would agree, Blackstone are no mugs when it comes to investing.

Look, bubbles are driven by lots of non-mug investors spending ways too much money in creating an oversupply of something which - in moderation - well might have its justification. No matter whether these are tulip bulbs, an untimely oversupply of care beds for retirement villages or lithium companies. We had them all, and I think KW is just saying that data centres might have the potential to be the next bubble.

I think she has a point.

But absolutely - if you think that the need for data storage will grow exponentially from here, then keep ramping IFT - Oops, no - better be quiet and keep buying them! It's just - nature does not know unlimited exponential growth, and at the time the shoeshine boy recommends the share it is the time to sell ;

[KW]

Global Crossing (a controversial US company of nearly 30 years ago) is a bit of a stretch if it's supposed to be a cautionary tail for fibre networks that have been laid in recent years. I really don't think the executives at Chorus lie awake at night worrying about it.

Its not a cautionary tail for fibre networks of today - its a cautionary tale for shareholders buying into the hoopla in the 90s as the "Internet" was the "story".  The entire point is that it was 30 years ago.  And the exact same thing is happening today with the AI "story", including the massive overbuild of data centres.

And what value and expertise does IFT add?  They are not pureplay specialist data centre providers with years of experience in building and managing data centres.  They are simply jumping on the bandwagon.  Its like every upstart in the 90s who suddenly thought they could build a telco overnight, like Packer and OneTel.   Hilarious how history repeats as soon as there are few investors around to remember how it all went wrong last time.

[Swala]

CDC has been operating since 2007 so hardly new to the sector. Greg Boorer was the founder and is the current CEO with skin in the game. I am very comfortable that he and Infratil know what they are doing.
Disclosure: Infratil is my largest holding

[LoungeLizard]

Look, bubbles are driven by lots of non-mug investors spending ways too much money in creating an oversupply of something which - in moderation - well might have its justification. No matter whether these are tulip bulbs, an untimely oversupply of care beds for retirement villages or lithium companies. We had them all, and I think KW is just saying that data centres might have the potential to be the next bubble.

I think she has a point.

But absolutely - if you think that the need for data storage will grow exponentially from here, then keep ramping IFT - Oops, no - better be quiet and keep buying them! It's just - nature does not know unlimited exponential growth, and at the time the shoeshine boy recommends the share it is the time to sell ;

Everything has potential to go wrong or right, but I'd say IFT are about as steady and as reliable an investment as you can get, because of their diversity. Fixate on data centres if you like but what about telecommunications, airports, renewable energy. Bubbles as well?

[LoungeLizard]

Its not a cautionary tail for fibre networks of today - its a cautionary tale for shareholders buying into the hoopla in the 90s as the "Internet" was the "story".  The entire point is that it was 30 years ago.  And the exact same thing is happening today with the AI "story", including the massive overbuild of data centres.

And what value and expertise does IFT add?  They are not pureplay specialist data centre providers with years of experience in building and managing data centres.  They are simply jumping on the bandwagon.  Its like every upstart in the 90s who suddenly thought they could build a telco overnight, like Packer and OneTel.   Hilarious how history repeats as soon as there are few investors around to remember how it all went wrong last time.

I think what you may be saying as that one has to be vigilant about one's investments. I can agree with that at least. But everything I have read indicates to me that data centres will be in increasing demand for at least the sort of time frame I invest in (5-10years). The vast majority of industry boffins and investment houses would agree. Data-centres will evolve and be more energy efficient and the technology within them will change, but they are not going away any time soon. If you have any ideas on what might replace them in the next, say, 20 years, I'd be genuinely interested to know.

[LaserEyeKiwi]

Its not a cautionary tail for fibre networks of today - its a cautionary tale for shareholders buying into the hoopla in the 90s as the "Internet" was the "story".  The entire point is that it was 30 years ago.  And the exact same thing is happening today with the AI "story", including the massive overbuild of data centres.

And what value and expertise does IFT add?  They are not pureplay specialist data centre providers with years of experience in building and managing data centres.  They are simply jumping on the bandwagon.  Its like every upstart in the 90s who suddenly thought they could build a telco overnight, like Packer and OneTel.  Hilarious how history repeats as soon as there are few investors around to remember how it all went wrong last time.

Most of the data centres being built today have nothing to do with AI, they are being built to serve the ever growing need for data storage and cloud computing as most enterprises continue the great migration form on-premise servers to cloud servers. Ditto consumers moving all their data and content consumption to the cloud rather than storing locally.

[BlackPeter]

Everything has potential to go wrong or right, but I'd say IFT are about as steady and as reliable an investment as you can get, because of their diversity. Fixate on data centres if you like but what about telecommunications, airports, renewable energy. Bubbles as well?

Nobody says that IFT will go down the drain. I am just saying that they are currently priced for perfection and a bit more. One of their larger investments suffering from bubble deflation and their capital will go down. That's not the end of the world, but it won't be pleasant for holders who thought that an investment into IFT puts them on a one way street to riches.

Its the same as with any other investment - at the stage the shoe shine boys are ramping them up, they might be as solid as they can be, but they inevitably will be too dear.

And just have a look into Infratil's history - it would not be the first time for them to make bad investment decisions (like European Airports or NZ bus), and it would not be the first time either that their share  price goes down and lingers for the better part of a decade in the doldrums. Just check how long it took their share to recover from the deflation of the 2007 bubble.

Just looking at their other industries:

Telecommunications? Well, I agree we are likely to keep telecommunicating for some years to come, however - its easy in this business to miss the jump to the next technology, which automatically puts you into the losers pit. Plenty of big companies went down that way by missing the change - cart manufacturers, Xerox, IBM, anybody sticking too long with copper. And just lets face it - Vodafone (or One.NZ as they call themselves these days) are neither particularly innovative, nor do they have a particularly good customer service. I doubt that they will be the money spinners of the future, at best they are another MeeToo.

Airports: Give us a break - Airports are overall ways overvalued and I can't see them significantly increasing their income and growing. At this stage its fairer to assume that we reached peak travel (due to climate crisis and peak human) and all will go down from here. Never a good idea to buy or own an asset at peak prices.

Alternative Energies - yes, sure - they are likely to be a growth industry. However - nobody can predict which energy will win and same as with telecommunication - if you put your money into one of the loosing threads its gone. Just look into the history of alternative energies so far - Ways more investors lost parts of their investment (look e.g. at NWF in NZ or Siemens Energy in Europe) than getting rich with it. Pity that you can't drive the windmills with the hype some of the posters produce.

I see IFT in bubble territory - and this is already bad without worrying about the horrendous fees the fund manager is extorting from the share holders. The capital value might drop, but not so sure about the fees.

But again - its fine with me if you see that differently ... its not my money ;

[Left Field]

IFT added to the S & P ASX 300 index

https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02850008_PS-2A1547093&v=fc9bdb61fe50ea61f8225e24ce041a0e155a9400

GTK also.....

[LoungeLizard]

Nobody says that IFT will go down the drain. I am just saying that they are currently priced for perfection and a bit more. One of their larger investments suffering from bubble deflation and their capital will go down. That's not the end of the world, but it won't be pleasant for holders who thought that an investment into IFT puts them on a one way street to riches.

Its the same as with any other investment - at the stage the shoe shine boys are ramping them up, they might be as solid as they can be, but they inevitably will be too dear.

And just have a look into Infratil's history - it would not be the first time for them to make bad investment decisions (like European Airports or NZ bus), and it would not be the first time either that their share  price goes down and lingers for the better part of a decade in the doldrums. Just check how long it took their share to recover from the deflation of the 2007 bubble.

Just looking at their other industries:

Telecommunications? Well, I agree we are likely to keep telecommunicating for some years to come, however - its easy in this business to miss the jump to the next technology, which automatically puts you into the losers pit. Plenty of big companies went down that way by missing the change - cart manufacturers, Xerox, IBM, anybody sticking too long with copper. And just lets face it - Vodafone (or One.NZ as they call themselves these days) are neither particularly innovative, nor do they have a particularly good customer service. I doubt that they will be the money spinners of the future, at best they are another MeeToo.

Airports: Give us a break - Airports are overall ways overvalued and I can't see them significantly increasing their income and growing. At this stage its fairer to assume that we reached peak travel (due to climate crisis and peak human) and all will go down from here. Never a good idea to buy or own an asset at peak prices.

Alternative Energies - yes, sure - they are likely to be a growth industry. However - nobody can predict which energy will win and same as with telecommunication - if you put your money into one of the loosing threads its gone. Just look into the history of alternative energies so far - Ways more investors lost parts of their investment (look e.g. at NWF in NZ or Siemens Energy in Europe) than getting rich with it. Pity that you can't drive the windmills with the hype some of the posters produce.

I see IFT in bubble territory - and this is already bad without worrying about the horrendous fees the fund manager is extorting from the share holders. The capital value might drop, but not so sure about the fees.

But again - its fine with me if you see that differently ... its not my money ;

If you've looked at IFT's  history then I presume you've looked at the share price history. I note that you're been professing doom for IFT on the other channel for some time. In the meantime those of us who believed in their strategy 5 years ago have trebled our investment (plus dividends). To the victor the spoils.

[Basil]

If you've looked at IFT's  history then I presume you've looked at the share price history. I note that you're been professing doom for IFT on the other channel for some time. In the meantime those of us who believed in their strategy 5 years ago have trebled our investment (plus dividends). To the victor the spoils.

Cool story so I brought up a 5 year chart.  Was $4.89 this time 5 years ago so that's a 143% increase.  Jarden website shows a "whopping" 1.93% dividend yield, so I guess plus dividends needs to be also put into its proper context. 

[LoungeLizard]

Cool story so I brought up a 5 year chart.  Was $4.89 this time 5 years ago so that's a 143% increase.  Jarden website shows a "whopping" 1.93% dividend yield, so I guess plus dividends needs to be also put into its proper context. 

I bought most of my shares in early 2020 when the SP was around $4. So yes, trebled. Divvy's are low so that's why it escapes a lot of investors attention, but as a growth stock IFT has no equal. I don't expect that to change and the current re-rating going is evidence of that.

[Basil]

No argument it's a good company with an impressive track record but to be fair, a lot of the share prices of companies really tanked in early 2020 with the onset of Covid so if your starting reference point is around that time it's going to artificially inflate the return relative to what most other holders have achieved.

[LoungeLizard]

No argument it's a good company with an impressive track record but to be fair, a lot of the share prices of companies really tanked in early 2020 with the onset of Covid so if your starting reference point is around that time it's going to artificially inflate the return relative to what most others have achieved.

The covid period doesn't really change any of the underlying figures, which seem to get lost on some with  all the talk about a potential bubble. IFT has a 10 year total shareholder return of 22%. In the last THIRTY years it's 18.7%. That's one hell of a bubble!